Continued Coaching Contract Analysis: Brian Kelly and James Franklin (Part II)

Following my recent analyses of Bill Belichick’s unconventional deal at UNC and James Franklin’s offset-driven buyout at Penn State, the latest development in Baton Rouge offers another fascinating glimpse into how legal drafting quietly shapes the economics of college football. LSU’s decision to part ways with Brian Kelly, just three and a half seasons into a 10-year, $100 million contract, triggered one of the largest potential buyouts in college sports history, estimated at roughly $53 million.

At first glance, Kelly’s deal resembles the massive, long-term guarantees that have become standard among many elite college football programs. However, as is often the case, the true significance may lie in the fine print. Like Franklin’s contract at Penn State, Kelly’s termination agreement (which is reportedly still being negotiated) could contain an offset clause requiring that any future income from new employment reduce LSU’s payment obligations. That mechanism, combined with a structure that spreads buyout payments over time rather than in a lump sum, would transform what looks like a financial shakedown into something more manageable. What appears to be $53 million in exposure could, depending on Kelly’s next move, end up costing LSU far less.

This framework would also reflect a broader evolution in the way schools balance financial protection with reputational and performance risk. Whereas Belichick’s front-loaded deal at UNC provides institutional flexibility after a guaranteed period, and Franklin’s contract tempers security with a duty to mitigate, Kelly’s falls somewhere in between. The agreement is grand in scale but could be tempered by legal engineering. Each school’s approach highlights a distinct philosophy of risk allocation. UNC front-loads exposure to incentivize early success, Penn State embeds accountability through mitigation, and LSU seems likely to stretch out its obligations, relying on offsets and negotiation leverage.

Together, these deals reveal the growing sophistication of sports contract drafting in a market where public optics, booster influence, and legal precision increasingly intersect. As buyouts across college football reach record levels (now approaching $170 million this season alone), the real battleground isn’t just on the field but in the clauses that decide who pays when coaches fall short of expectations. Kelly’s departure underscores what the Belichick and Franklin cases already hinted: in modern sports law, the guarantee is rarely absolute, and the true cost of failure can often be hidden in the margins of the contract.

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Following this first update on Brian Kelly’s departure from LSU, the situation has escalated into one of the most closely watched buyout disputes in college football history. Kelly has filed a lawsuit in Louisiana, asking a court to confirm he was fired without cause and that LSU owes the full remaining value of his contract. This number would come out to roughly $53 million, the second-largest buyout in college sports behind Jimbo Fisher’s $77 million from Texas A&M.

The dispute underscores how coaching contracts blend financial guarantees, procedural protections, and legal contingencies. LSU initially offered Kelly $25 million, then $30 million over two payments, both without offset, much like the lump sum buyout negotiated by former LSU coach Les Miles following his 2018 firing from the program. However, Kelly’s legal team rejected these offers, insisting the school honor its contractual obligations for the full amount. At the same time, LSU has signaled the potential for a “for-cause” designation, which would allow the university to reduce or eliminate its payment obligations. Kelly’s contract lists more than a dozen prohibited acts, from falsifying records to failure to comply with NCAA rules, that could theoretically justify such a decision.

Procedural safeguards further complicate the matter. Kelly’s agreement provides for a seven-day cure period and written notice before any for-cause termination, along with the right to respond. As a public university, LSU is also bound by constitutional due process obligations, meaning Kelly has avenues to contest a “for-cause” claim if he can show procedural deficiencies or reliance on assurances from university leadership.

This unfolding case reinforces a broader theme from my analyses of Belichick, Franklin, and now Kelly: in modern college football, contract guarantees are rarely absolute. The real leverage often lies in the clauses that define termination rights, offsets, cure periods, and procedural protections. Kelly’s dispute is a live demonstration of how high-stakes coaching contracts are as much about legal precision as they are about compensation and how the fine print can drive multi-million-dollar outcomes.

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In my last post, I also analyzed how James Franklin’s contract at Penn State stood in stark contrast to the guaranteed windfall models seen elsewhere, specifically noting how his "duty to mitigate" created a financial safety valve for the university. This week, we watched that legal theory translate into a staggering financial reality. With Franklin’s official hiring as the next head coach at Virginia Tech, the $49 million buyout obligation that initially dominated headlines has been negotiated down to a $9 million lump sum settlement.

This $40 million variance offers a masterclass in how offset and mitigation clauses drive settlement strategy rather than just passive accounting. Had Franklin’s contract lacked these specific enforcement mechanisms (similar to the fully guaranteed structure Jimbo Fisher enjoyed at Texas A&M), Penn State would likely be on the hook for the full amount regardless of his next move. Instead, the existence of the offset provision created immediate leverage. Because Franklin secured high-level employment quickly, fulfilling his contractual duty to mitigate, the parties were motivated to avoid the administrative burden of calculating monthly salary offsets through 2031.

The settlement effectively functions as a "buyout of the buyout." Penn State agreed to pay a premium in the form of a $9 million lump sum to eliminate the long-term liability, while Franklin gains immediate liquidity and a clean slate to begin his tenure in Blacksburg without the shadow of his former employer looming over his paycheck. It is a textbook example of how mitigation clauses often do not result in a dollar-for-dollar offset over time but rather serve as a catalyst for a negotiated lump-sum exit.

The resolution highlights that the true value of a mitigation clause is its ability to force a compromise. Unlike the current situation at LSU, where Brian Kelly is reportedly litigating a disputed $54 million payout, Penn State utilized its contract structure to pivot toward the future with a significantly lighter balance sheet. For legal practitioners and athletic directors, the Franklin-Penn State separation serves as the ultimate proof of concept: well-drafted mitigation duties do not just protect against worst-case scenarios; they actively facilitate cleaner, cheaper divorces.